How to Terminate an Employee without Facing Lawsuit

Nemelou Despuez July 29, 2009 — 3,077 views

Employers should be careful in terminating a worker to avoid costly lawsuit. To avoid legal consequences, company owners should know these termination laws:

* Generally, employers can fire anyone unless there is an agreement or contract that states that a worker can only be terminated for certain reasons. Unlike in other countries such as Japan, Canada, Italy and UK which require employers to give valid reasons before terminating a worker, the US generally follows "at-will" employment which means that unless there is a contract saying otherwise, a worker can be terminated for any reason or even no reason at all.

* While "at-will" employment gives employers the right to fire anyone for no reason at all, they can still face lawsuit if the termination violates public policy.

* Violation of public policy happens when:

1. A worker has been terminated on the basis of gender, sexual preference, religion, disability, age, national origin, race, and color. According to the Equal Employment Opportunity Commission (EEOC), workers have the right to file discrimination lawsuit against their employers if the termination is based on prejudice.

2. A worker has been terminated as part of the company's retaliation. According to EEOC, a worker who is seeking reasonable accommodation for disability or reporting to authorities the company's illegal activities (whistle-blowing) cannot be terminated.

3. A worker has been terminated for practicing his statutory rights such as taking medical leave, filing for a worker's compensation, and filing a lawsuit against his employer.

4. A worker has been terminated for refusing to commit any unlawful act. According to lawyers, it is illegal to fire a worker who refused to give false statement before a court, to perform something he is not license to do, or to conspire in tax evasion scheme.

5. A worker has been terminated for doing his legal obligation. According to attorneys, employees cannot fire a worker who is serving as a jury or testifying before a court even if he will be absent for a long period of time.

* While "at-will" employment does not require employers to give valid reasons before firing someone, most lawyers advise that it is better to explain the grounds for termination to the workers.

* Employers can offer severance pay to terminated workers. While severance pay is not required by law, many company owners have offered this to their laid-off workers.

According to several studies, workers who have received severance pay and other separation pays are less likely to file lawsuits against their companies.

* Some employers will deliberately make the working condition intolerable for workers to force them to resign, thinking that this tactic will save them from lawsuit. However, doing so is still considered illegal and employers may face constructive discharge lawsuit.

* If possible, employers should find other alternatives before laying off workers such as freeze hiring, reducing working hours, reducing authorized overtime, providing voluntary early retirement, and other cost-cutting measures.